"to rescue truth from beauty and meaning from belief"

Monthly Archives: June 2014

I am taking up PM Lee’s suggestion that ‘someone… collects examples, and help us do better’. It will be by way of commentary rather than a dedicated website as I am no IT geek.

By no means am I best qualified to do the task. Hence, I welcome anyone who will contribute to the observations and correct me where I may miss something or be wrong. Hopefully, our common interest in and concern for effective communication by our leaders will make up for when I should fall short.

As life would have it, Minister Lim Swee Say gets the honour to kick this off.

Point #1
“the CPF is your money”, here Swee Say echoes his Manpower Minister colleague, Tan Chuan-Jin. He then goes further, elaborating ‘Nobody can take away that money from you.”

Here’s the gibberish.

If something is ‘your(s)’ it means that it ‘belongs to you’, you ‘own’ it. Hence, in the ordinary meaning of ‘ownership’, the owner would have the undisputed right to do what she pleases with it. But this is not so with CPF. More and more CPFers are realizing that their ‘right’ to their own CPF money has been heavily curtailed, cut – how the money is invested, the rate of return for use of their money, how one chooses to use what has been agreed originally to be withdrawn at 55 etc.

Therefore, Swee Say is clearly saying something that is truthy (seems to be, but not necessarily true) but not true in the ordinary meaning of the words used.

Point #2
“your money with CPF is 100 percent safe and continues to earn risk-free interest, even during challenging times such as the global financial crisis in 2009.”

It is correct that our CPF ‘continues to earn… interest’.

However, we must take exception to the claim that it is “100% safe… and risk-free”. Nobody honest in the field of investments can, should or will claim any money placed with any entity, individual or group, is ‘100% safe and risk-free’.

But, we must be fair to Swee Say. His words can, in some context like the one he uttered, off-the-cuff and to ordinary citizens, be taken to ordinarily mean ‘very safe’ even if it is not true, legally-speaking. So, we can tolerate the lax.

However, measuring that by his own PM’s standard that even in ‘an informal conversation… (to) not impress anyone. Use simple language which people can understand’, he falls short. Therefore, Swee Say should have uttered ‘your money with CPF is AAA-rated, that is very safe and earn 2.5% interest even during….’

The question then arises, “Why are we paying Swee Say more than S$1.1mil per month if he is ignorant or wilfully negligent to be specific where he surely can be on such an important issue for citizens?”

Point #3
“the less you make use of your money when you are young, the more money you will have for retirement… It is clear in this context that ‘young’ refers to those who are aged 55 and ‘less use’ of the CPF money refers to the CPF cash withdrawal for purposes other than housing, healthcare and education for the children.”

Someone else has already called out Swee Say’s disingenuous use of ‘young’ to refer to ‘those aged 55’. [Link]

So, no need to belabour the point. We would just suggest that hearers would have been better off with, ‘the less you make use of your money for other purposes when you turn 55, the more you will have for retirement’.

ConclusionSo, what should we make of these 3 shortfalls?

He reportedly also said, ”the labour movement has been watching the debate closely, and wants to ensure that what is discussed does not create confusion among workers and union leaders.”

It would appear to the average hearer/reader that Swee Say has done exactly the opposite of what he claimed to want to ensure, i.e. create more confusion instead of less!

Hence, the truth behind his words appears to be to ‘confuse’ or obfuscate in order to hide something about the CPF. What can that be, now he has left us wondering.

PM Lee’s FB post on ‘plain speak’ piques my interest. Lucy Kellaway who writes about Apple losing its way to ‘gibberish’ is often heard on BBC FM88.9. I like her irreverent style and some of her prescient observations of modern life.

Perhaps PM Lee did not read the readers’ comments which followed. Pity.

The one comment that stands out relevant to Singapore’s context is a George Orwell quote.

“Now, it is clear that the decline of a language must ultimately have political and economic causes… But an effect can become a cause, reinforcing the original cause and producing the same effect in an intensified form, and so on indefinitely. A man may take to drink because he feels himself to be a failure, and then fail all the more completely because he drinks. It is rather the same thing that is happening to the English language. It becomes ugly and inaccurate because our thoughts are foolish, but the slovenliness of our language makes it easier for us to have foolish thoughts.”

“In our age there is no such thing as ‘keeping out of politics.’ All issues are political issues, and politics itself is a mass of lies, evasions, folly, hatred, and schizophrenia. When the general atmosphere is bad, language must suffer.”

“Political language — and with variations this is true of all political parties, from Conservatives to Anarchists — is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind.”

How very apt, methinks!

Form Follows FunctionOrwell appears to be saying that how a language develops or is used is essentially shaped by the politics and economics of the day and place. Hence, if PM Lee finds he has to ‘circulate(d) this article to my colleagues, to remind ourselves to be simple and direct when we communicate with the public’, is he not tacitly admitting that, per Orwell, PAP’s language has declined due to political and economic causes?

For those of us who lived through the 60’s to the 80’s, it is telling that Goh Keng Swee prescribed ‘Complete Plain Words’ as compulsory reading for civil servants. LKY even organized a talk devoted entirely ‘to discuss the importance of simple, clear, written English’. Note, the problem for LKY then was ‘ much graver lower down’ [Link]

But now? It is ‘ministers and the govt’, albeit only ‘once in a while we still fall short.’ But isn’t that for us hearers to judge?

Anyway, what does that imply?

Two things; one, vs the 60’s-80’s, the cabinet and govt echelons are now one in sync (echoing Low Thia Khiang’s take on ‘abuse of power’ using ‘civil servants to serve partisan goals’).

Two, since PM Lee must believe that his cabinet is doing fine except for those ‘once in a while we still fall short’, the many white hot issues – PWP, unemployed PMEs, CPF, housing, transport, healthcare, NS, cost of living, income gap etc – were non-existent or are now under control.

But PM Lee cannot run from the fact that language used (form) must serve the function – the purpose being to evade or divert, obfuscate, cover-up, talk-up. Think defamation suit, hospital beds, Dinesh Raman’s death and housing prices falling by decimals vs past triple-figure increases respectively.

Function Follows TruthDigging deeper, what drives function? Ah…The function/purpose must surely come from the truth that lies behind it. What then is the truth behind the function?

As an e.g., consider his admission of lack of 20/20 foresight resulting in once world-leading services/products (say, train services & HDB prices) becoming a curse to citizens the last decade. Instead of attacking the root causes of over-population and high land prices, they work to assuage the symptoms. Hence, the language to play up the ‘truth’ of their (stop-gap) solutions – but burying, never addressing the root causes.

Adding to ‘foolishness’ would be greed masquerading as GDP growth at all cost. It’s the economy, stupid – and nothing much else. Everything else is secondary, if it ever mattered at all. Hence, the purpose becomes to communicate, promote the golden calf as the only dance in town. All other music must follow therefrom. No growth, no go for other programmes. Nope, cannot touch bits of what’s saved, never mind the raining all about us.

Truthiness From FormNowadays, technology and higher literacy drive the demand for openness, if not the truth. But ‘you can’t handle the truth’, more like ‘our truth’ is what PM Lee & colleagues must think. So, in place of openness/truth, PAP gives us ‘truthiness’ (the quality of seeming or being felt to be true, even if not necessarily true).

Here’s a sampling; ‘CPF is your money’, ‘constructive politics’, ‘flip flop’, ‘here’s $10,000, $1,000 buys you a 3-room flat’ etc. All sounding like the truth that they should – but are ‘not necessarily true’.

But the words that take the cake: PM Lee at the National Day Rally, 14 Aug 2011, ‘we are putting Singaporeans first’…. being overridden by his junior colleague, a senior minister of state (manpower), Amy Khor in parliament, 27 May 2014 ‘“Singaporeans first” will not benefit the economy in the long term’.

For those keen to better understand CPF performance and how your hard-earned cash has actually been working for you in preparation of yr retirement, you can do no worse than compare what you read on Sgp MSM and what’s published at tremeritus.com.

I post this article by Chris K partly because I suggested to him to write a follow-up on his comparison between Norway’s GPF & Sgp’s CPF (<http://www.tremeritus.com/2014/06/15/norways-gpf-8-vs-singapores-cpf-0/&gt;). The idea is to reach out to fence-sitters and PAP supporters who are inclined to think that TRE is biased towards views that make the PAP look bad but ignores those comparisons where the PAP govt has a clear edge. Since many would believe, correctly I daresay, that Malaysia compares less well against Sgp, I suggested the M’sian EPF.

Nothing works to make better decision with honest adults than factual info from both ends of a divide.

My other motivation to post it here is to share my input via a comment I made in response to Chris article. You will read it after his ends.

After Norway has trashed Singapore 8-0 (some thought the score should be 9-0!) on the issue of Sovereign Wealth Fund transparency, the writer received several requests to look into how a less transparent SWF stacked up against our own. For this, the writer picked our close neighbour, Malaysia’s Employee Provident Fund (EPF) which, by itself is no model of transparency on the scale of Norway’s Government Pension Fund. Even so, Malaysia thumped Singapore by 4-0.

EPF is CPF-GIC-Temasek Combined

As a preamble, it is useful to note that EPF not only manages the provident fund like CPF but is also responsible for investing members’ funds both domestically and internationally like GIC and Temasek. As such, there is no equivalent of the Special Singapore Government Securities which stands in the way of transparency and of CPF members getting a return that is not dictated by politics. By its construct, the EPF already beats CPF. Let us see how EPF stacked up against GIC and Temasek.

Snapshot of EPF’s Key Numbers

EPF’s 2013 Annual Report contains more information on its investments than GIC, and Temasek. First, let us look at EPF’s market value which includes invested funds, new monies and retained earnings (Annual Report which shows the last 5 years return can be download back to 2001).
Next, the annual returns and dividend payouts over the past 5 years are provided below.

2009

2010

2011

2012

2013

Ave

Return on Investment

4.88

6.08

6.58

6.87

6.97

6.28

Dividend Rate

5.65

5.80

6.00

6.15

6.35

5.99

It can be seen that EPF’s payout to its members is close to its rate of return on investments. The writer surmised that EPF is prudent to retain some of its returns in its general reserves to mitigate against potential losses. GIC’s 5 year return in US$ terms at 2.6% or estimated 0.6% in local currency terms and Temasek’s 3% in local currency terms compares poorly to EPF’s 5-year return of 6.28% in its own local currency terms. As noted in the Norway 8 Singapore 0 article, GIC does not disclose its total market value. Neither does GIC disclose its annual rate of return except for rolling 5, 10 and 20-year rates. Temasek does not have annual rate of returns earlier than 5 years ago. It should also be noted that EPF’s growth in market value should be driven largely by members’ monies because most of its returns are paid out in dividends.

Other Useful Information

The EPF provides the following information that neither GIC nor Temasek provide.

Top 30 risk exposure (all Malaysian companies), not as good as the GPF.

Its operating expenses which include the entire infrastructure of EPF, not just its investment fees, equal to 0.21% for 2013, averaging just 0.18% for the 5 year period.

It is clearly stated in its governance report that MYR 1,317,600 is paid to the Board and Investment Panel members and MYR 2,781,105 is paid to its Chief and Deputy Chief Executive Officers.

A Pertinent Question

Under its current investment mandate, the EPF can only invest 23% of its funds outside of Malaysia. Its domestic portfolio comprises equities, bonds, loans, deposits and properties. It is subject to less foreign exchange risk than GIC which has nearly all its assets invested overseas. Surely, there is a dichotomy between citizen’s retirement funding being in S$ and GIC’s returns being in foreign currencies which put CPF funds at risk to foreign exchange loss caused by the MAS’ exchange rate policy. One would expect at least a proportion of its assets ought to be domestic. But the valuable S$ GLC assets are in Temasek which states that it does not manage CPF monies. Should not the GLC assets be under GIC instead, to reduce the foreign exchange risk of CPF funds, or is the government keeping its most valuable assets to itself? It is not difficult even for a layman to see the contradictions running through the entire CPF-GIC-Temasek set up, make even more contradictory by the MAS policy which produces a negative effect on overseas investment income.

Conclusion

The EPF is admittedly a different animal but the writer finds little to fault its set up in comparison to the multiple layers in Singapore. The point should already be made that although the EPF is no Norwegian GPF, it is still 4 goals to zero to Malaysia. In purely local context, Malaysia “boleh”, Singapore “tak boleh”.

– To make it obvious, how much the Board of Directors @ GIC & TH decide on paying the CEOs who, in turn, decide on the salaries and bonuses of the fund mgrs are all ONE BIG BLACK HOLE to CPFers whose funds are channeled by fiat to GIC and as citizens with moral if indirect legal claim to our nation’s wealth being handed out to TH to play with.

To belabour the abv point, if 5-year EPF’s mgt cost averages 0.18% and if according to GIC & TH preferred approach of ‘benchmarking against best practices’ we can reasonably guess that the mgt fee would then be in the ballpark figure of at least 1% (what’s Blackstone’s rate, anyone, to compare like-4-like given both’s int’l exposure if not fund size?)

Which means CPF paid 5.556X EPF mgt fees. Is it not EPF 5, CPF 0? May I introduce a different score system to better reflect GIC/TH’s own egregious, selective benchmarking of their own actions (commercial vs SWF)? Make that EPF 4, CPF -1.

– A 2nd observation on the investment choice. Diversification of risk via geog mkt, sectors, instruments etc is an accepted approach. However, would not the basic aim remain constant? Maximisation of returns for shareholders (oh, it’s the govt who is the only shareholder…that’s another self-serving, legal protective armour plate) commensurate with GIC/TH’s profiled risk levels.

Fine.

Does that not mean tt one should ‘invest’ more in and where one’s strengths are fully exploited? Does tt not mean tt, it should be in line with the mission “To enable Singaporeans to have a secure retirement, through lifelong income, healthcare financing and home financing”?

As our CPF monies have obvsious been degraded and depreciated over the last decade or so vs inflation, have the fund mgers and, indeed, the govt tt allows for this govt-led, govt-sanctioned cheat-the-citizen scheme been called to account? Or have we been instead paying thro’ our nose for non-, negative performances?

Revised score EPF 4, CPF -2.

(PS: We all know who are those who sit in the respective Boards of Directors in GIC & TH. Let me be very, very clear, I am not alleging or implying corruption. But it is obvious that ‘NON-ACCOUNTABILITY’ & ‘MERITOGUANXI’ are 2 key insidious constructs.

Again, I do not apply the words here literally but figuratively, “Cesar’s wife must be above suspicion.” There is a simple solution to anyone who disagrees with my take here. Just ‘show us the money’ if you are so darn sure of your governance standard. Asking to just ‘trust us’ is no longer enough on evidence before us all.

If that is not taken up, it can only mean what Lee Kuan Yew presciently observed 25 years ago, “The moment key leaders are less than incorruptible, less than stern in demanding high standards, from that moment the structure of administrative integrity will weaken, and eventually crumble. S’pore can survive only if Ministers and senior officers are incorruptible and efficient.” – (then PM Lee Kuan Yew, 1979)

‘But, but we are already paying the highest salary worldwide for our transport minister, sold to us as part of the best (and most costly per capita) cabinet in the world but getting atrocious service, so how?’

The headline question appeals to our intuitive side. However having not just heard but experienced so much and for so long the constant refrain of ‘Pay-And-Pay’, we have conditioned ourselves to think counter-intuitively – whatever another member of the establishment spews these days… particularly as the next GE approaches.

In the last 2 months or so, the likes of Tommy Koh, Kishore M, Chan Heng Chee and, now, Gerard Ee appear as the voices of reason to push their perspectives on key issues that have been impacting the man-in-the-street. Should we be surprised if, going into the last lap before the next GE, the Straits Times continue to try to sway the narrative with more ‘neutral, reasoned opinions’ on healthcare, housing, education etc by non-govt elites? Do not these non-govt figures appear to be speaking from the same meritocratic (or ‘meritoguanxi’) heights – completely in touch with each other but far removed from the lives, needs and expectations of Mr Everyman?

So, please let me first get it off my chest before we examine Gerard Ee’s talking down or at us.

Change we must. End PAP’s dominance or PAP’s dominance will end us.

IS IT A TRADE-OFF – OR A TICK-OFF?

Ee kicks off by framing the issue of travel time, comfort and cost for commuters as ‘a balancing act’. He helpfully suggests that it does not ‘really hurt that… few more seconds… or… three more trains…better to accept travel to and from work… takes a bit longer, but it’s affordable’. That’s really strange, considering that he is an accountant, expert with figures and statistics. A 10-second difference over 4 mil trips/day means nearly 300,000 man-days needlessly lost yearly! Peanuts? How does his take square with the govt’s view on ‘productivity’ and the adage, time is money? And to read him advocating a less demanding attitude even as he admits to commuter satisfaction slipping during his tenure?

But he goes further. It’s public transport, ‘so by that very nature, (buses, trains) are going to be crowded…not designed for comfort. If you treasure your comfort, you pay a premium’. In other words, it’s money talks first and foremost in the ‘transportation’ of people i.e. a business, not the ’public’ in public transport i.e. a public good. So, why call it Public Transport Council and not Public Transportation Council in the first place? Isn’t it scary that a man with such a view sat as head of PTC for a decade?

To flourish his credentials, that he is not speaking as a face-in-his-Merc, Ee continues, in London ‘you may have to walk four, five bus stops before finding one where the service you want stops.’ How reasonable, Mr Ee! But at least 2 reasons why it cuts little ice in Singapore’s context.

– One, London is a BIG CITY, Metro area of 8,382 sq km is almost 11X ours & population density of about 1,800 vs our 8,000/sq km. So, commuters correctly and reasonably understand that, particularly in the suburbs and outskirts of town, one has to walk a little more.

– Two, London’s average summer day temperature is 22Celsius with humidity in the mid 60’s compared to Singapore’s perennial 30Celsius and RH of 90%. Perhaps, when Chairman Ee walks more than 3 bus stops in Singapore he is probably out exercising and wants to sweat it out – by deliberate choice to de-stress, unlike us, to earn a day’s stress and wage with little choice.

Nonetheless, he continues. ‘If you treasure your time and…comfort, you pay a premium…If you value (that) even more, buy a car. And then ultimately, get a chauffeur.’ That sounds almost like the zenith of reason and reasonableness. The question is: as Chairman of the PTC, exactly who is your average commuter? Of course, it is not his remit to discuss COE prices. Still, how can we fault him for his reasonableness in ticking us off?

Why not apply that same rationale to, say, housing? How about healthcare? Education? Heck, why not to every facet of Mr Everyman’s life? After all, everyone knows that Pay-And-Pay gets you everything from the best cabinet in the world to the best life one can afford. Perhaps, the 60.1% Singaporeans agree to that basic tenet of the party they voted in. So, why even bother with the 39.9% whose expectations are misplaced?

Whilst he admits that things can always be improved, he also asks again rhetorically, ‘Are you willing to pay higher fares?’ If not, then ‘either adapt to the current situation or keep grumbling’. In other words, “The hard truth is you have elected a govt that lacked 20/20 foresight who has failed to ‘synchronise’ population growth with transport requirements, so gnash your teeth and bear it. What else can you do, sucker?”

Finally, the trade-off is inescapable because it’s that ‘one fixed pot of money (and)…how to slice it up’, between investing in a project (e.g. new airport terminal) that grows the economy or that takes away a few seconds of waiting time and less crowd in buses, trains. He asserts without proof or elaboration that higher taxes will drive away the rich who create all the jobs. Likewise, using our reserves is ‘out of the question’ as we need a strong SIN$. But he explains not why that same strong S$ has not helped us much inflation-wise. We see fixed asset-inflation running away and carrying along with it prices of all the imported stuff, presumably bought by businessmen paying cheaply and either making a killing or compensating for higher rents into the govt’s coffers.

GERARD EE’S ULTIMATE SOLUTION TO TRANSPORT WOES

“As for where the key to public transport satisfaction lay, Mr Ee did not mince his words. ‘Commuters changing their attitudes’”, Ee concludes.

It appears that ST has done a great job to uncover all that ails Singapore. Not unlike the PMET unemployment situation, it is the fault of Singaporeans who are ‘Pampered, Mediocre, Expensive and Timid’, so it is with the public transport issue. Singaporeans’ attitudes need changing according to none other than the Chairman of the PTC for 10 years.

I actually agree with Gerard Ee on the need for change. More so as I see the likes of him, once-respected elites apparently quite happy to be roped in to be apologists or to give credence to the govt’s preferred narrative on every conceivable shortcoming; to softly, softly influence citizens to take a position against those who see otherwise. Therefore, neither do I mince my words. This govt and the elite are sticking with their attitude of blaming citizens for their snafus instead of taking responsibility. I shudder to think another term with them as leaders with such a frame of mind in public service.

This is an opinion piece that just cries out to write itself into existence.

TTSH & MOH – High Standards of Integrity

Press releases are not to be taken lightly. There is usually plenty of time to think through the many possible interpretations for the different audiences intended or that may come to read them.

For citizens taking the recent statements put out by TTSH and MOH at their face value, we cannot but applaud them for setting and then holding even their lower-ranking employees to their high corporate standards of integrity.

From TTSH, we have

“Mr Ngerng’s conduct was incompatible with the values and standards we expect of our employees. While our staff are free to pursue their personal interests outside work, they must conduct themselves properly, honourably and with integrity.”

And,

“MOH supports TTSH’s decision as Mr Ngerng’s actions show a lack of integrity and are incompatible with the values and standards of behaviour expected of hospital employees.”

For both TTSH and MOH to go to such lengths to demonstrate their commitment to integrity is indeed laudable. Both are merely practising what PM Lee has time and again emphasized what Singapore cannot do without:

“… maintaining high standards of integrity and honesty is the key differentiator between politics in Singapore and in many other countries.” – (28 May 2014, on ‘Constructive Politics’ in Parliament)

PAP & PM Lee – Consistent Stand on Integrity

Every one of the three PMs that Singapore has known thus far has emphasized the supreme importance of integrity at one time or another.

“The moment key leaders are less than incorruptible, less than stern in demanding high standards, from that moment the structure of administrative integrity will weaken, and eventually crumble. Singapore can survive only if Ministers and senior officers are incorruptible and efficient.” – (Then PM Lee Kuan Yew, 1979 [Link])

“But it is not just efficiency of the bureaucracy. More important is integrity: integrity of political leaders, public officials and the value system of the country.” – (Mr Goh Chok Tong, 18 Oct 2008)

“This is the standard that we must hold ourselves to, and that Singaporeans have rightly come to expect from those in politics, whether in government or opposition. This is why we must take accusations of dishonesty against political leaders very seriously,”
– (PM Lee Hsien Loong, 13 July 2013, in Parliament when confronting WP on AHPETC’s spring cleaning of hawker centre)

Aren’t we Singaporeans so darn fortunate to have leaders who put so much emphasis on the indispensability of integrity in public institutions and life?

Integrity Consistency – But For A Toothpick Thrown Into The Works

“Many restaurants give you toothpicks, but the toothpick is so big it can never go through, but this one is so fine that whatever is inside sure can come out… In fact, can never resist…They always serve in a pack,” – he told reporters at BreadTalk Group’s new headquarters in Tai Seng.

“And because I go there very early – 10.30 in the morning – always full right. And guess what? By the time I left, normally right, it’s half left. The other half is in my pocket.” – (Minister in the Prime Minister’s Office Lim Swee Say, 22 July 2013, on Din Tai Fung’s toothpicks [Link])

Why are we holding lower level employees to the high standards of integrity in the use of office time and resources while completely ignoring a minister in the PMO going to lunch at 1030 hours as a matter of course and snitching on toothpicks? And, as someone astutely pointed out, since SGX trades can only be done from 0900 to 1700 hours working days, how about another minister who could trade shares in the million units and make millions $$$ more there from?

Of course, we must state a sparrow or two do not a summer make, that the entire government and civil service is lacking in integrity.

But, we must surely recognise ‘it is important to see distant things as if they were close and to take a distanced view of close things’. Hence, could we be looking at ‘the moment’ that LKY speaks of, “The moment key leaders… are less than stern in demanding high standards, from that moment the structure of administrative integrity will weaken, and eventually crumble.” LKY, the wise man that he is, understands that the one who is faithful in little is faithful in much.

The question of the moment, then, for PM Lee is, has that moment passed by him now? Or will he put aside his pride or double standards and come through for Singapore somehow? Or is he so distracted with his own personal reputation over a silly infringement from an over-zealous citizen, that he is too far gone to care for the State of the Nation?

Not my original intent, but the responses and comments posted in reaction to the first article published in TRE on 5 Jun suggested to me that, perhaps, I need to make some factors behind my approach more explicit for some readers less inclined to think through the situation.

No longer a newbie at TRE, why did I bother to offer my 2cents approach to Roy that is contrary to TRE base of readers mostly clamouring for blood? It’s because Roy needs that other voice to keep whispering in his other ear – now, more than ever.

What makes me qualified to speak? Two reasons;

One, I’ve read up more than most TRE readers here from sources and of perspectives other than and different from those that TRE readers read. Or Roy reads.

Two, no one appears to be doing it, so I should at least try to give a view and a practical suggestion to stir up not just shot-from-the-hip comments but provoke a different line of thinking on what the ISSUE is amid the rumpus of this circus-act-of-the-month. Sorry, it’s too soon to declare this episode a milestone.

The known unknowing ones on both sides

Reading only the right stuff exists on both sides of the Singapore divide. How many TRE readers have seen the photos of Roy with his plate of plain rice (but shot in a café)? Or him ‘taking 5-min of power nap on bus 401’? Well, fabricated or not, there are Singaporeans reading stuff different from others.

And those who slammed Sir Nelspruit’s question about Accountability and Transparency, was he not merely applying the same measure Roy uses on others to measure back to him? The question of why Roy is appealing for donations while JBJ & CSJ did not is an honest and relevant one that can better equip readers to counter those who question them later.

How many TRE readers are concerned enough like Sir Nelspruit to actually reach out to and offer his personal assistance to Roy? If you are honest about yourself, read this.

The unknowns known only to one

At least two unknowns we should be concerned about.

One, composition of the donors. When TRE can’t even raise US$3000 of the US$12,000 after 5 weeks while Roy received 20x that amount within 5 days, does it, should it not raise more than eyebrows? One can understand Roy has a face and the foe is specific. But which has been, is and will be more important to the cause of TRE readers and, by extension, opposition supporters?

My guess is that a sizeable amount donated to Roy comes from the Pink Brigade. Think the parallel; Pink Dot at Hong Lim Park attracted >10k while the PWP that affects the lives of all Singaporeans, not just LGBTs, managed only 3k. Why? It’s that sense of fraternity, never mind the cause. Is there a parallel oppo fraternity amongst voters? Mark my word, 7 Jun will see more pinks coming. (Note: I merely state a pink fact, no moral judgment.)

What if 50%, 60% of the donations were pink, does that change the calculus of actual support on the CPF issue? Or is that diluted with a, pun unintended, pinky hue?

Two, why the apparent eagerness to be served the writ? What of the announcements then deletions made by his confidante, Hui Hui, about martyrdom, asylum etc etc which Sir Nelspruit has closely tracked and claimed can call up to show?

So, what is Roy’s true motivation, taking everything that he has and has not done? Well, only he knows.

The yet-to-be-known

Roy should understand a day in court is no walk in the park. I took my employer once to court and should know a little. Has Roy sought out CSJ to at least understand what to expect? If not, why not? Is Roy just raring to go and relying on just his own lawyer? Is that good enough, wise?

Wouldn’t anyone normal want to gyrate towards a course with greater certainty, less unknowns? Why hurl yourself headlong towards the unknown, go the whole 9 yards? What for if your claim has always been that ‘the CPF will be transparent to ordinary Singaporeans’ (23 May, apology letter to LHL)? Being true to yourself?

How about us spectators? Would those egging Roy towards the centre of the coliseum actually act on their own advice if in Roy’s shoes?

How would making PM Lee pay a high price help their cause? Could that ‘punishment’ backfire at the GE? Remember a GE is not a BE. Remember also that anger stirred differently may also (perversely, to oppo supporters) cause a swath of undecided voters to play it safe and support an embattled PM to buttress support for the international audience, if only to show solidarity for a 50-year branding exercise. So many unknowns.

Settling for a less unknown outcome

I had asked in my earlier article, ‘those who disagree with my view to imagine the many, many other gains to be had taking this route.’ The many comments I read appear to suggest it can do with some help.

Perhaps, this one scenario may help.

Imagine: Regaining the initiative, Roy announces his one last statement on the saga.

“With my heart-true gratefulness for the exceptional and strong support from my fellow citizens, I decide that, for the good of all Singaporeans, it is better that I try to reach an out-of-court settlement with the Prime Minister. This shall be done in full confidence and in private. Once done, I shall get back to accounting for the donations raised. Once done, let us get back to getting the answers that we citizens deserve from our government, any sitting government of the day, about what belongs to us and how we want to see our money managed such that we can live reasonably well. Thank you.”

Just imagine all the possibilities arising therefrom.

If not, then let me end with this story:

Daedalus is a brilliant inventor—the Edison of his day. Unfortunately, he angers King Minos, the ruler of the island Crete, and he has to hightail it out of there. Desperate to flee the island, Daedalus uses wax to build some wings for himself and his son Icarus. Daddy Daedalus warns his son to fly at a middle height: the seawater will dampen the wings and the sun will melt them. (Not good either way.) Icarus heeds his father’s advice for a bit, but then he gets cocky…having so much fun flying …he forgets the warning and flies too close to the sun. Sure enough, his wings melt, and Icarus plummets into the sea and drowns. [Link]

And words from a song:

Once we were running through smoke and fire Running into the sun In the rush of youth, for love and truth Our deeds were done” – (Jackson Browne, World in Motion)

Story and verse are for Roy…

But those who donated and now think that it entitles them to a ringside view such that ‘if Roy is going to be made bankrupt anyway, he might as well go down fighting the extra mile for us while he still can. In fact, going the “whole nine yards” would maximise the use of the donated funds.’ Yeah, our young deserve to ‘go down fighting the extra mile for us’ until he can no longer – then what? Another young sacrificial lamb?

I got to know Chris thro’ TRE. After exchanging some comments, we got in touch and met up back in Feb, I think, when he came by Singapore from Tokyo. Since then, we have exchanged more ideas and thoughts. Below is the 2nd collaboration we did for TRE.

He is the brain behind the piece written. I know only so little about matters financial. So, I merely ‘ride’ along for the credit…

[Editor’s Note: The following article was submitted to TRE for publication on Thursday, 29 May i.e. before ST came up with their own 3-point wish list under Politics 360 on 31 May.]

This article, the first of 2, outlines proposals to revamp CPF with the objective of improving returns. The second, shorter article, deals with Withdrawals and Medisave. Some aspects of what is proposed may come across as controversial to Singaporeans but the objective is to stimulate discussion and debate of that which rightly belongs to the citizens must yield a fair return for retirement and healthcare funding.

Low Returns on CPF and savings

As a preamble, it is useful to understand that the monetary policy framework and the fiscal strategy of persistent budget surplus conspire to generate low rate of returns on not only CPF but also personal savings. These arrangements had the result of favouring the corporate sector with low cost of capital at the expense of citizens’ savings. Moreover, the government controls CPF rates by administrative fiat but like to make reference to market yields as if the dynamics of the market have not been affected by those policies to produce the desired outcome for the government. This provides a powerful tool to set CPF rates against prevailing inflation to deliver additional surpluses. Through the Net Investment Return Contribution (NIRC) framework, the government has an inherent bias towards low CPF rates as the resulting low government debt servicing means higher sums for discretionary spending.

Proposed changes to CPF Returns

To improve returns on CPF, the authors seek to modify the setting of CPF rates from administrative fiat to one decided by inflation or actual market based returns. Here is a choice of 3 proposals with the simplification of 1 rate for all accounts (no distinction between OA, SA, MS, RA for transparency).

Option A: Inflation indexation of CPF rates

All CPF accounts to be indexed to the inflation rate by having the interest rate priced at a spread over the inflation rate. The authors propose using the long run 2% average inflation premium of the 30 year inflation-indexed bonds of the major issuers such as Australia, Canada, Germany and the US. The following table gives an overview of what inflation-indexed CPF rates would have been in the past 7 years against what CPF members actually received by government decree.

2007

2008

2009

2010

2011

2012

2013

Ave

Inflation

2.1

6.5

0.6

2.8

5.3

4.5

2.4

3.5

Ave CPF Rates

3.3

3.4

3.4

3.4

3.4

3.4

3.4

3.4

Indexed Rates

4.1

8.5

4.6

6.8

7.3

6.5

4.4

5.4

In 2013, inflation indexation would mean that an extra $5.2b interest will be taken from the investment returns of reserves. Each CPF account would have gained an average of $1,480.

Advantage: This counters the effect of inflation, is transparent and does not require CPF members to make investment decisions. It is simplest to enact since it is a matter of changing the current interest rates of the Special Singapore Government Securities (SSGS) to the above inflation-index method. The government continues to guarantee principal and interest because CPF continues to invest in SSGS.

Disadvantage: In times of low inflation, the interest rates will be low but remain above inflation.

Option B: Rates linked to GIC or Temasek

This proposal converts CPF into an actively managed fund whose rate of return is generated either by GIC or Temasek. This will necessitate CPF to invest directly in the selected entity to ensure legal claims to its returns. This makes redundant the present investment in SSGS which is the legal barrier preventing CPF from receiving the full returns. The selection should be based on accepted risk tolerance: lower risk / lower return GIC or higher risk / higher return Temasek. Historical returns below.

GIC

Temasek

Reported 10 year returns

5.3%

13% (Temasek delivers net income, est. 7.5%)

*Temasek has the advantage of owning GLC assets, the most stable and valuable assets in its portfolio which gave CPF an exposure to Singapore which GIC does not.

Having made the selection, a necessary step will be to adjust the total amount of assets in the selected entity to the total amount of CPF liabilities plus a government-injected general reserve which includes CPF’s own operating surplus. The creation of the general reserves mitigates the end of the government guarantee due to the redundancy of SSGS. This arrangement ensures CPF ownership of the assets in the selected entity and have full claim on the returns while enjoying risk mitigation from the general reserves. The selected entity manages the CPF funds and the general reserves as a single pool.

The other entity remains a Sovereign Wealth Fund providing a clear separation of CPF assets and sovereign assets for full transparency, a complete and necessary departure from the present obfuscation. The selected entity should be subject to quarterly review by the Ministry of Finance and CPF, semi-annual testimony to a Parliamentary select committee and annual public audit.

Advantage: Similar to the Option A, CPF members are not required to make investment decision. Returns can be higher than Option A.

Disadvantage: In times of poor investment performance, returns can be less than Option A or may even suffer losses but this is mitigated to a large extent by the general reserves,

Option C: CPF Member Self Investment

The final proposal is to allow CPF members to self-invest up to 50% of their CPF accounts. The self-invest portion will be subject to much wider criteria than the present CPFIS, such as a wider range of investment choices including foreign investments under a specified maximum limit of exposure. The remainder of funds in CPF will be subject to Proposal A or Proposal B. This proposal requires CPF members to make investment decisions on their self-invested portion and should do so under advice from professional pension advisors. CPF members may choose not to self-invest at all.

Advantage: Combined returns can be higher than Option A or B.

Disadvantage: Poor investment choices and market down turns can cause returns to be lower than Option A and B due to the lack of general reserves against losses in the self-invested portion.

No chance of Happening

The proposed options are radical requiring wholesale changes to the debt management dynamics of the government. Aside from showing the government has been less than forthright with citizens in regards to the effectiveness of the present CPF format if the suggested options are effected, there are also 4 significant if indirect impact;

1. CPF will no longer be captive to the government’s persistent arrangement of the SSGS/ bond market within the monetary policy framework to deliver low financing costs to the corporate sector at the expense of citizen’s savings.

2. The government can no longer use a high inflation – low CPF interest servicing equation to deliver benefits to its budget at the expense of CPF savings’ future purchasing value being eroded by recent low, at times negative real CPF rates of return.

3. The government will also not be able to use low CPF rates to generate high NIRC for discretionary spending as they have done for the PG Package if and when they regard such spending serves a political purpose.

4. CPF’s rate of return will be transparent. The present difference between CPF rates and returns generated from the reserves which include CPF funds will be eliminated or drastically reduced.

Hence the chance of any of the above happening under the present government will be zero. Is this fine with citizens? Or is it time that we deserve better returns to meet our retirement and healthcare needs?

Chris K / 2cents

* Chris K holds a senior position in a global financial centre bigger than Singapore. He writes mostly on economic and financial matters to highlight misconceptions of economic policy in Singapore.